Interview with Jaime J. Bautista, Secretary, Department of Transportation

25 Oct Interview with Jaime J. Bautista, Secretary, Department of Transportation

What major projects are currently underway to modernize the Philippines transportation and logistics segments?

The Department of Transportation oversees four sectors: aviation, maritime, rail and road. Aviation is crucial for our archipelagic country of 7,600 islands as it enables vital connectivity and tourism. To enhance our economy and attract more tourists, we are prioritizing airport infrastructure development and modernization. We currently have 90 airports in the country, with half operating commercially and serving commercial airlines and the remaining 45 catering to private operations and flying schools. We are currently improving all commercial airports as part of our ongoing efforts, including upgrading existing airports and privatizing operations. This includes Cebu and Clark airports, with Manila International Airport scheduled for privatization in September. We have a comprehensive long-term plan across all sectors to increase tourism, boost revenues and create jobs. We aim to make the Philippines a premier tourist destination.

In the maritime segment, we have more than 700 ports nationwide — primarily in major cities — which require improvements. Our focus is on enhancing cargo handling efficiency to reduce logistics costs and working closely with the private sector to operate more ports. While some ports are already privatized, many outside Manila remain untapped. Modernizing cargo vessels and domestic shipping is crucial; we are collaborating with legislators to enact laws incentivizing ship operators to upgrade their fleets. We are finalizing the construction of the Cebu International Container Port Terminal, which will be capable of accommodating two 2,000 twenty-foot equivalent unit vessels. This project is being done in collaboration with the Export-Import Bank of Korea. Our goal is to alleviate congestion in Cebu and bolster economic growth, job creation and tax revenue through increased commercial activities.

In the road segment, we are enhancing bus services with innovative projects. The EDSA Bus Carousel in Manila is situated along major thoroughfares, operates in dedicated lanes, offers passenger walkways and minimizes traffic. This model is quite popular internationally and encourages bus usage over private cars. We are collaborating with Davao City to introduce a bus modernization program and deploy more than 1,000 buses including 400 electric ones to replace 7,000 old jeepneys for a more comfortable travel experience. Similar efforts are underway in Cebu with the Cebu Bus Rapid Transit System. In Metropolitan Manila and major cities, we are implementing a public transport modernization program with the aim to replace nearly 180,000 jeepneys with more comfortable, air-conditioned models that adhere to national standards. This multi-component initiative includes automated fare collection and improved dispatch systems and fleet management to enhance safety, efficiency and passenger convenience.

In the rail segment, we operate three light rail transit lines. The oldest is nearly 50 years old and is undergoing modernization and expansion with five new stations opening by the end of 2024. The second line spans 15 kilometers across Manila and the busiest — the Metro Rail Transit Line or MRT3 — connects northeast Manila to the airport. We plan to privatize MRT3’s operations in a similar fashion to Line 1. Additionally, construction is underway on the North-South Commuter Railway, a 147-kilometer elevated system from Clark Airport to Laguna. It is a $15.6-billion project that will be able to carry around 800,000 passengers per day and reduce travel time from Clark to Laguna to under two hours and to Manila International Airport to only 45 minutes via an express train. The project is funded by Asian Development Bank (ADB) and the Japanese International Cooperation Agency. Operations are expected to begin in 2027. Additionally, construction of a 33-kilometer subway line — the Philippines’ first subway — from Valenzuela to Terminal 3 with future extensions to Laguna is progressing, with completion expected by 2029. The project is also funded by the Japanese International Cooperation Agency and will cost almost $8.53 billion.

The country’s many projects such as the Luzon Corridor and the Subic-Clark-Manila-Batangas railway aim to significantly reduce logistics costs, which is currently a high 27% of item prices in the Philippines compared to just 11% in Singapore. This new infrastructure will stimulate economic growth, create jobs and increase tax revenues by facilitating smoother commercial transactions across Subic, Clark, Manila and Batangas.

Can you tell us about the recent $1-million grant given by the USA to enhance the country’s maritime segment?

This project focuses on conducting a feasibility study to expand the Philippine Coast Guard’s vessel traffic management systems. The study aims to enhance maritime safety and efficiency, which will have an impact on local and international maritime trade, tourism and revenue generation. This initiative is part of a trilateral agreement between the Philippines, Japan and the United States and exemplifies our commitment to modernizing and improving logistics costs in the country. We have numerous infrastructure projects in the Philippines that are funded through official development aid from Japan, Korea and ADB and supplemented by limited government funds.

What efforts is DOTr making to lower the carbon footprint of transportation in the Philippines?

Sustainability is a top priority for us, especially amidst the challenges posed by climate change. In the aviation sector, we are actively supporting the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation or CORSIA initiative, which aims to reduce carbon emissions from international airline operations. The Civil Aviation Authority of the Philippines is collaborating with the International Civil Aviation Organization to implement CORSIA nationwide. We are partnering with various companies to supply sustainable aviation fuel (SAF). For example, Cebu Pacific has already tested SAF on its flights. Although SAF is currently more expensive than traditional avgas, global demand is high and local materials are being exported to meet this demand. We are encouraging local business groups to invest in SAF production to support this crucial initiative across the aviation sector.

In the land sector, we are launching a project that will deploy 400 electric buses in Davao and Cebu as part of our public transport modernization program. This initiative aims to replace 180,000 jeepneys with modern Euro-5 or Euro-6 engines and electric motors. We are incentivizing a shift towards more sustainable public transportation through the adoption of electric vehicles with tax exemptions and waived tariffs. Currently, there are fewer than a thousand electric public utility vehicles in operation. We are actively encouraging more investments, such as a recent discussion with a major business planning to establish an electric jeepney manufacturing factory. Additionally, the electric trains we are introducing will significantly aid in addressing climate change by reducing reliance on fossil fuels and alleviating traffic congestion, a major economic burden estimated at $69.3 million per day in Metropolitan Manila. By encouraging more people to use trains instead of cars, we aim to mitigate both costs and environmental impacts.

We are also collaborating with ADB on plans for the Metro Rail Transit Line 4 or MRT4 network, which — though not extensive — will serve densely populated areas. An innovative aspect of this project involves exploring the use of solar panels installed above a nearby lake to power the electric train system. In the maritime sector, we are encouraging operators to invest in new equipment powered by solar or methanol. The Philippines’ Maritime Industry Authority or MARINA recently signed a memorandum of agreement with a European company to train our seafarers in operating methanol-powered vessels, with training programs already underway. This initiative ensures our seafarers are prepared for future advancements in maritime technology.

What opportunities are we seeing that might be of interest to US and other foreign investors?

A key financing avenue is public-private partnerships. We invite investors to explore opportunities in our flagship projects across the country. As a member of the National Economic and Development Authority Board, we recently approved 185 Infrastructure projects, with 65 managed by the Department of Transportation. Some projects began under previous administrations and will continue into the next; infrastructure developments span multiple presidential terms. Private sector support is crucial, particularly in aviation. We are privatizing operations at 15 more airports, including Ninoy Aquino International Airport or Manila International Airport and the upcoming New Manila International Airport in Bulacan. The latter is a $13-billion endeavor that will start early 2026. Opportunities abound for American investors, contractors and consultants in the Philippines. Projects such as the Laguindingan Airport in Northern Mindanao and Bohol Airport are already open for privatization bids. We are finalizing plans for Davao Airport and anticipating bids from major companies soon with ADB’s assistance.

Additionally, we are relocating four airports from congested urban areas to new sites for improved efficiency, which has opened up development opportunities. In Dumaguete, the airport is being moved about eight to nine kilometers outside the city to facilitate urban growth and enhance revenue potential through property sales. Similarly, in Mindanao we are relocating Zamboanga Airport to accommodate larger aircraft and support operations of American military personnel. Municipal airports such as Siargao — a popular tourist destination — are being moved to new locations with longer runways to accommodate increased traffic and create new business opportunities. In the rail segment, we are moving towards privatizing operations and maintenance across all lines. We are currently finalizing the business case with ADB for MRT3 and inviting bids from investors. The North-South Commuter Railway will also be privatized as will the subway project. Privatization enhances efficiency and leverages private sector expertise. These developments present significant investment opportunities for Americans looking to participate in the market.

Our government values the vital role of the private sector. We ensure regulations are equitable and reliable. The new public-private partnership framework prioritizes investor protection through incentives and fair regulations. We recently enacted a new public-private partnership law and approved its implementation to ensure consistency and equity for investors. Private sector contributions are crucial to our program execution given our fiscal constraints. We are confident investments will yield favorable returns and satisfy investors, particularly in our transportation projects.